“There is a fiscal disconnect between Washington and the campaign trail. While the presidential candidates are fighting over what to do with a $2 trillion surplus, politicians back in Washington are spending at a pace that would leave very little surplus to fight over. Either spending must be constrained, or our expectations for the likely size of the surplus should be lowered. The fiscally responsible approach would be to do both,” said Robert Bixby, Executive Director of The Concord Coalition.
The most widely used surplus projection is the one prepared by the Congressional Budget Office (CBO), which assumes that discretionary spending will grow no faster than the rate of inflation over the next 10 years ¾ less than 3 percent per year. But that assumption is at odds with what has actually happened since budget surpluses replaced deficits in fiscal year 1998. Starting that year and including the likely level of spending planned for the current fiscal year (2001), discretionary spending has gone up at an average annual rate of 5.5 percent.
If spending continues to increase at this rate, rather than the rate assumed in the CBO baseline, it would reduce the non-Social Security surplus by $1.4 trillion. Instead of having a surplus of over $2 trillion, we would have a surplus of about $700 billion ¾ a good sum of money but far less than the cost of the presidential candidates' promises. For more details, check out Concord's Current Trend Baseline 2001-2010, now available on-line. (Requires Adobe Acrobat Reader)
“Clearly it's a lot more difficult to hold spending to the rate of inflation, or below, when there is a surplus. Assuming that the next Congress and the next President will be a lot more tight-fisted with the surplus than the current Congress and the current President is simply not realistic. Therefore, the surplus projections which are based on that assumption aren't realistic either,” Bixby said.
The Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-N.H.) and Sam Nunn (D-Ga.) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president. The organization does not endorse, support or oppose candidates for public office or political parties.